The Bank and its subsidiaries (collectively the “Group”) mainly provide corporate and personal banking, treasury business, finance leasing, fund and asset management, investment banking and other financial services in the PRC.
The Group's profit attributable to shareholders for the 9 months ended 30-09-2019 amounted to RMB 45.53 billion, an increase of 6.7% compared with previous corresponding period. Basic earnings per share was RMB 1.04. No dividend was declared. Net interest income amounted to RMB 71.30 billion, an increase of 32.5% over the same period last year, loan impairment charges and other credit risk provisions increased by RMB 13.00 billion to RMB 43.26 billion. (Announcement Date: 30 Oct 2019)
Business Review - For the six months ended June 30, 2019
During the Reporting Period, the Company took active measures in implementing the spirit of the central government and regulatory policies aiming to support the development of real economy. Based on the customer-centric principle and the three major strategic positionings of becoming “a bank for the NSOEs, a fintech-based bank and a bank of comprehensive services”, the Company adhered to the business strategies of “developing light-capital business, optimising liabilities, adjusting structure, promoting synergy and maintaining high quality”. Reforms and improvements were further promoted in order to support organic growth. Operating profits have been steadily increased with continuous enhancement of business structure and growth of capital. Quality of assets has maintained generally stable. The operation of all business lines has achieved healthy and stable development.
(I) Steady growth in profits and continuous improvement of operating efficiency
Income and profit continued to increase. During the Reporting Period, the Group recorded net profit attributable to equity shareholders of the Company of RMB31,623 million, representing an increase of RMB2,005 million, or 6.77%, as compared with the corresponding period of the previous year. Operating income was RMB87,083 million, representing an increase of RMB12,796 million, or 17.23%, as compared with the corresponding period of the previous year. Net interest margin was 2.00%, representing an increase of 0.23 percentage points as compared with the corresponding period of the previous year.
Returns to shareholders remained steady. Return on average assets and return on weighted average equity were 1.04% and 14.86%, representing an increase of 0.04 percentage points and a decrease of 0.95 percentage points as compared with the corresponding period of the previous year, respectively. Basic earnings per share was RMB0.72, increased by RMB0.04 as compared with the corresponding period of the previous year. Net assets per share attributable to ordinary shareholders of the Company was RMB9.76, increased by RMB0.39 as compared with the end of the previous year.
Operating efficiency was further improved. During the Reporting Period, the Group continued to further optimise its cost structure and cost input-output efficiency was enhanced constantly. During the Reporting Period, cost-to-income ratio was 21.12%, representing a decrease of 3.23 percentage points as compared with the corresponding period of the previous year.
(II) Strengthened capital base and coordinated growth of assets and liabilities
During the Reporting Period, the Group actively grasped market opportunities and policy windows, and made full use of innovative capital instruments to replenish its capital. Tier-two capital bonds of RMB40 billion and undated capital bonds of RMB40 billion were issued successfully, which significantly eased the capital constraints and increased the capital, providing favourable support to the sustainable business development. As at the end of the Reporting Period, net capital base of the Group amounted to RMB623,388 million, representing an increase of RMB76,107 million, or 13.91%, as compared with the end of the previous year. Capital adequacy ratio was 12.81%, representing an increase of 1.06 percentage points as compared with the end of the previous year.
Asset and liability businesses maintained steady scales and experienced coordinated growth. As at the end of Reporting Period, total assets of the Group amounted to RMB6,340,658 million, representing an increase of RMB345,836 million, or 5.77%, as compared with the end of the previous year. Total loans amounted to RMB3,183,961 million, representing an increase of RMB127,215 million, or 4.16%, as compared with the end of the previous year. Total liabilities amounted to RMB5,851,986 million, representing an increase of RMB288,165 million, or 5.18%, as compared with the end of the previous year. Total deposits amounted to RMB3,427,515 million, representing an increase of RMB260,223 million, or 8.22%, as compared with the end of the previous year.
(III) New breakthrough in reforms and improvements and significant progress of major businesses
During the Reporting Period, the Company strictly adhered to its strategic positions and transformation objectives and continued to implement reforms and transformation measures. Significant progress was achieved, operating efficiency was improved, management was refined and customer value continued to increase.
Focus on NSOEs and major customer groups. The Company steadily implemented the strategy to support NSOEs through the “five-in-one (五位一體)” services for NSOEs and by improving the quality of integrated services for strategic customers. As at the end of the Reporting Period, the total number of strategic NSOE customers was 650, representing an increase of 83.62% as compared with the end of the previous year. The number of domestic corporate customers with deposits and domestic customers with general loans balance of the Company were 1.23 million and 9,094, respectively. The Company continued to refine the standardised operation system of retail customers, promote the vertical management reform of retail business and develop the New Small Business Model 3.0, resulting in rapid growth of revenue from retail business. As at the end of the Reporting Period, total number of retail customers with existing financial assets was 40,061.7 thousand, representing an increase of 1,667.2 thousand as compared with the end of the previous year. Financial assets under the Company’s management amounted to RMB1,724,030 million, and total small business loans amounted to RMB246,050 million. During the Reporting Period, net income from retail business amounted to RMB32,269 million. The Company strengthened the cooperation with interbank customer group effectively through classified marketing efforts. The balance of interbank liabilities (including interbank negotiable certificates of deposit (IBNCD)) amounted to RMB1,656,014 million and interbank assets amounted to RMB333,525 million.
from retail business amounted to RMB32,269 million. The Company strengthened the cooperation with interbank customer group effectively through classified marketing efforts. The balance of interbank liabilities (including interbank negotiable certificates of deposit (IBNCD)) amounted to RMB1,656,014 million and interbank assets amounted to RMB333,525 million.
Strengthened innovation of products and business models with technologies. The Company actively developed innovative fintech to improve the customer experience and service efficiency. Firstly, the Company accelerated the construction of its technology platform and developed a new supply chain finance platform. Significant innovations and breakthroughs were achieved in the development of credit flow products of accounts receivable. As at the end of the Reporting Period, the number of core supply chain customers was 184, representing an increase of 97.85% as compared with the end of the previous year. Secondly, the Company placed great efforts in the development of online businesses such as direct bank, remote banking and online small business loan in order to improve its smart service capability. As at the end of the Reporting Period, the number of direct bank customers reached 24,062.9 thousand, representing an increase of 4,891.6 thousand as compared with the end of the previous year. The number of personal e-banking customers reached 52,105.4 thousand, representing an increase of 4,201.5 thousand as compared with the end of the previous year. Thirdly, the Company enhanced the application of technology in the development of internet finance and business operation, and supported the implementation of strategies and reform and transformation by capitalising on the transformation of distributed structure.
Enhanced integrated operation with diversified services. The Company accelerated the diversification of its business distribution and relied on its overseas business platform to strengthen cross-selling and business coordination, facilitating the advancement of its competitiveness of comprehensive services. During the Reporting Period, total operating income and net profit of subsidiaries amounted to RMB2,339 million and RMB800 million, respectively. The coordination of domestic and overseas businesses continued to improve, and the development of overseas organisations achieved significant progress. As an important strategic platform for the integrated development and international expansion of the Company, CMBC International offered all-round, diversified and one-stop financial services to the customers of the Company. During the Reporting Period, net profit of CMBC International amounted to HKD226 million, representing an increase of 36.97% as compared with the corresponding period of the previous year. The Hong Kong Branch of the Company focused on the strategic opportunities from the development of Guangdong-Hong Kong-Macau Greater Bay Area, and achieved rapid growth in various businesses including bonds underwriting, asset custody and private banking. As at the end of the Reporting Period, total assets of the Hong Kong Branch of the Company amounted to HKD177,739 million.
(IV) Strengthening risk prevention and control and maintaining generally stable asset quality
During the Reporting Period, the Group continued to improve its overall risk management system by actively expanding the application of risk measurement tools, enhancing the prevention and active management of various risks and allocating additional resources to the collection and disposal of existing problem loans and nonperforming assets. The assets quality remained generally stable.
As at the end of the Reporting Period, total outstanding balance of NPLs of the Group amounted to RMB55,649 million, increased by RMB1,783 million, or 3.31%, as compared with the end of the previous year. The NPL ratio was 1.75%, representing a decrease of 0.01 percentage points as compared with the end of the previous year. The allowance to NPLs and the allowance to total loans were 142.27% and 2.49%, respectively, representing increases of 8.22 percentage points and 0.13 percentage points, respectively, as compared with the end of the previous year.
Business Outlook - For the six months ended June 30, 2019
To cope with changes in external conditions and internal development demands, the Company has formulated the Overall Implementation Scheme for Reform and Transformation and the Three-year Development Plan of China Minsheng Bank (《中國民生銀行改革轉型暨三年發展規劃整體實施方案》) in order to accelerate the implementation of its reform and transformation. In the coming three years, the Company will be committed to becoming a benchmark bank with distinctive features, increased value and continuous innovation. The Company will also strategically position itself as a bank for NSOEs, a fintech-based bank and a bank of comprehensive services. The year of 2019 is a critical year for the effective implementation of reform and transformation as well as the three-year development plan.
A bank for NSOEs. The Company will firmly adhere to its NSOEs strategies. With its focus on NSOEs and the people, the Company will focus on large- and mediumsize high-quality NSOEs, enterprises along the upstream and downstream of the supply chain of core enterprises and small and micro enterprises, and serve as a financial butler of NSOE customers and their senior management with integrated, customised and comprehensive financial services. The Company will further improve its mechanism and business model so as to further professionalise its NSOE services. It will strive to become the host bank and preferred bank of the NSOE customers.
A fintech-based bank. The Company will continue to be driven by “data + technology” and vigorously develop direct bank, small business online credit and credit card online customer acquisition to strengthen fintech and secure its leading position in the industry. The Company has provided comprehensive services of “technology + finance” by financial cloud. It will also enhance its scientific and technological capacity by proprietary research and development of a national leading distributive core system so that technology can empower business. The Company will improve its intelligent level of finance services to build an internet bank with the best customer experience in China.
A bank of comprehensive services. The Company will expedite its business layout diversification to cover fields including trust, leasing, fund and asset management and achieve integrated and comprehensive services of the Group. The Company also aims to establish a cross-selling and business coordination mechanisms under its “One Minsheng” strategy to promote cross-selling and synergy between business segments, operating branches, the Head Office and subsidiaries and provide its customers with comprehensive financial services with the integration of commercial, investment and transaction banking and the combination of capital, intelligence and commerce. The Company will prioritise its customers and provide integrated and comprehensive services through the cooperation of front, middle and back offices.
In implementation of the new three-year plan and promotion of reform and transformation, the Company will stick to the overall operation strategy of “lightcapital, optimised liabilities, adjusted structure, promoted coordination and secured quality” based on the core principles of high quality development and efficiency. Its deployment includes strengthening the principal businesses including direct bank, small business finance and investment banking and consolidating the leading businesses including credit card, supply chain finance and asset management. On the basis of the above deployment, the Company will transform itself from focusing on traditional businesses into a benchmark bank of the industry principally engaging in digitalised, light-capital and comprehensive business. In addition, greater reform and innovation efforts will be made. With innovative mechanisms and systems of its major management aspects, the Company will be able to revitalise its structure and establish a customer-centric operation and management system, so as to extensively enhance its professional management and support the implementation of its business development strategies.
Looking forward, adhering to the policy of “reform for development and innovate for transformation”, the Company will thoroughly study the economic and financial circumstances and market changes, focus on supply-side structural reform and prevent and control financial risks. The Company will strengthen its financial support on NSOEs as well as small and micro enterprises. Through multiple measures including stabilising growth, restructuring business, preventing risks, promoting coordination, optimising technologies, improving efficiency, consolidating foundation and enhancing Party building, the Company aims to give priority to quality and efficiency to achieve organic development and changes so as to strengthen its capability to serve the real economy.
Source: Minsheng Bank (01988) Interim Results Announcement